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What’s the driving force behind investors like you?

Successful investors plan their investments around key goals.

Market Review

Equity markets in India were weak throughout September. This was on the back of the weak rupee, concerns over rising inflation, and partly concerns over the trade war happening globally. On the other hand, corporate results have picked up some momentum after some weakness over the last 2 years, due to disruptions from GST and demonetization. Though there are some fears of inflation, it is still well under control, at about 5%, compared with an 8%-10% inflation seen few years back.

Meanwhile, what matters to investors like you?

To understand how the Indian investor is planning their financial journey, over the past few months, we have been meeting with several investors and their families .

One common theme that emerged, from our conversations with people who have planned their financials well, is the concept of planning for goals.

Most people have multiple financial goals in their lives. In the early stage of their careers, important financial goals cover things like saving to buy a personal vehicle and a home. We also met with quite a few people saving up for their marriage. Increasingly, the responsible youngsters of today want to fund part of their wedding (the country is in safe hands!).

As they progress, key goals changes to children’s education, retirement, and even marriage for their children. We are also seeing the emergence of saving to send children abroad for studies. Throughout this journey, there are short term goals as well like planning for an annual holiday.

Some of the most organized people seem to plan well for each of these goals. They plan for such goals at an individual level, and without taking their eye off their larger integrated goals. Smart people also protect their journey to these goals, from any unforeseen risks through sufficient health insurance and term life insurance.

Depending on the time frame of each goal and liquidity needs, the mix of equity or debt for each goal changes. For example, if you intend to save for a holiday you wish to take a few months down the line, you are better off saving in debt instruments (Scripbox Short Term Money), where there is no downside risk in the short term. On the other hand, if you are saving for your retirement, say 20 years later, having a predominant portion in equity mutual funds (Scripbox Long Term Wealth) is the wiser thing to do – as the long term return potential overrides the short term fluctuation.

We believe ‘goal based’ financial planning will pick up in the coming years, not only because many smart people do that in India, but also because this is practised widely in many developed economies.

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